Have you provided another person goods or services and they have not paid? If so, you can take steps to enforce a payment and recover the money owed to you. This article will outline how to enforce a payment in the NT through reminder letters and then, a Letter of Demand. The following article will explore recovering the debt through the small claims division in the Magistrates Court in the Northern Territory, located in Darwin.
Send a Letter of Demand
Sending the debtor (the person owing you money) first and second reminder letters can assist with preserving your business relationships. If this is unsuccessful, however, you will then send a Letter of Demand to the debtor. This will outline the outstanding debt owed and the possible consequences if they fail to pay the amount within a specified period. Potential consequences include taking legal action against them.
It is important to send a Letter of Demand before initiating formal legal proceedings for a number of reasons. Firstly, a Letter of Demand warns the debtor about your intention to commence legal proceedings if they do not pay, and it provides them with an opportunity to avoid facing legal action by paying you the money owed. If the Letter of Demand is successful and the debtor pays you the outstanding amount, then both parties will have saved time and money by not having to go through the court process. However, if you do end up recovering your debt through litigation, you may still need to show the Letter of Demand as evidence of your attempt to settle the matter.
After receiving a Letter of Demand, the debtor may:
- Pay the money owed,
- Negotiate a Payment Plan,
- Ignore the Letter, or
- Dispute the amount owing or existence of the debt.
If the debtor refuses to pay the debt, you will need to think carefully about what your next move will be. Commonly, people will write off relatively small debts. This is because the cost of recovering the money in court far outweighs the money owed. For example, if the debt is $2,000 or less, it may not be worth pursuing this through the court process.
How to Enforce a Payment Through the NT Small Claims Division
If you do choose to recover your debt through litigation, you can go through the Northern Territory Local Court where the amount can be considered a ‘small claim’. A small claim is either:
- An outstanding amount arising from money, goods purchased or delivered, labour or a combination, and
- an amount between $2,000 and $100,000.
LegalVision has a team of great litigation and dispute resolution lawyers who can assist you. If you have any questions on how to enforce a payment in the Norther Territory, please get in touch with us on 1300 544 755. In the meantime, please continue reading on how you can recover your debt through the Small Claims Division in the NT.